Pharmacy agrees to $1 million settlement

McGregor's denies Medicaid, consumer fraud allegations

Dec. 18, 2012

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Free Press Staff Writer

A locally-owned pharmacy has agreed to pay $1 million to the state and federal governments to settle allegations of Medicaid and consumer fraud, according to Assistant Attorney General Edward Baker.

McGregor’s Pharmacy agreed to the settlement but continues to deny the allegation, according to a statement from the company. The company has two pharmacies, in Winooski and South Hero, but the case relates only to the Winooski store, Baker said.

Baker said the pharmacy charged the Medicaid program a $4.75-a-month dispensing fee four times more often than permitted by law for each customer’s order. The $1 million settlement will go to reimburse those costs, he said.

About 1,000 customers who bought Medicaid prescriptions at McGregor’s will also receive refunds for illegal fees they were charged from 2004 through 2011, Baker said. The fees were typically about $7.95 or $9.95 a month and added up to $111,000 overall, he said. The state is still compiling who is eligible for a refund, he said.

As part of the settlement, pharmacy owner Audrey McGregor-Reardon has agreed to step down and is excluded from Medicaid transactions, Baker said. Her husband, Tom Reardon, will take over the company, Baker said, a move the state finds acceptable. “The state feels comfortable with that arrangement,” Baker said.

McGregor’s, in the statement, continued to deny the allegations. “The case consisted of complex issues and we disagreed with the state’s analysis,” the company said. “The owner denies any wrongdoing, but to resolve this matter, has agreed to step down. The alternative was to close the company. Her departure was for the good of the employees and for all of the patients that she dearly cares about.”

Baker said McGregor’s is now in compliance, but the state Medicaid program stopped doing business with the Winooski McGregor’s. The store will be eligible to re-enroll as a Medicaid pharmaceutical dispensary, Baker said.

Baker said McGregor-Reardon was was not a pharmacist but was in charge of making decisions about how the pharmacy conducted business, and thus was the focus of the case. McGregor-Reardon was a third-generation family owner of the business.

Baker said he believes the state became aware of the case from the state auditor’s office in 2007, and investigated and filed civil enforcement action against McGregor’s in 2010. Just before that, he said, McGregor’s sued the state seeking to challenge the claims. McGregor’s challenge was denied and incorporated into the state court case.

Of the $1 million repayment to Medicaid, McGregor’s has paid $250,000 with the balance to be paid over seven years with interest, Baker said. He estimated that a couple hundred thousand of that will go to the federal government and the rest to the state for the shared program.